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Links 7 Dec: Apple's Mac Manufacturing Returns: But What About The Jobs?

So Apple is going to manufacture one or more of the Mac line inside the US come next year:

When asked by NBC’s Brian Williams why Apple couldn’t be a “made-in-America company,” Cook replied, “We’ve been working for years on doing more and more in the United States. Next year we will do one of our existing Mac lines in the United States.”

He elaborated on that planned move in a wide-ranging interview with Bloomberg Businessweek that touched on many of the same points that he discussed with NBC. “We’re really proud of it,” he said, referring to the decision to manufacture an as-yet-unnamed Mac in the US.

“We could have quickly maybe done just assembly, but it’s broader because we wanted to do something more substantial,” he said. “So we’ll literally invest over $100 million.”

Hurrah! Whoopee! and similar. This is the beginning of the long awaited jobs renaissance no doubt! Well, quite possibly not in fact. For we also got told that Foxconn is going to be opening up manufacturing in the US:

Apple CEO Tim Cook already revealed plans to spend $100 million in 2013 to bring some of its manufacturing back into the US — and one of Apple’s main manufacturing partners similarly has plans to move stateside. According to an interview with Bloomberg, controversial manufacturer Foxconn is planning to expand its operations in North America to meet the needs of customers who want to build products in the US. “We are looking at doing more manufacturing in the US because, in general, customers want more to be done there,” Louis Woo, a Foxconn spokesman, told Bloomberg in a phone interview — though Woo declined to speak about any specific partners or plans.

It’s not actually a huge leap to suppose that as Apple is going to manufacture in the US, as Apple’s manufacturing partner opens up in the US, that it will be Apple’s manufacturing partner that does Apple’s manufacturing in the US.

Foxconn spokesperson Louis Woo said in an interview with Bloomberg that “supply chain is one of the big challenges for US expansion,” adding that “any manufacturing we take back to the US needs to leverage high-value engineering talent there in comparison to the low-cost labor of China.”

And the reason he’s still right (dead yes, but still correct) is that very $100 million that Apple says it will invest in this manufacturing.

To a reasonable level of detail there are two ways you can make things. You can use a lot of low priced labour. Or you can use a few high priced machines. No one actually uses entirely one method or the other but everyone lies somewhere along that spectrum. What makes the decision one way or the other is the relative expense of each method. Until recently in China labour was so cheap that lots of labour was the answer. However, just recently, we’ve seen people complaining that the $400, $500 a month the workers get is changing that equation. Even Foxconn itself has said it will install a million robots over the next couple of years.

So now let us take a look at costs in the US. Given US labour costs, are we going to see Apple go the labour using route? Given that even at Chinese labour costs this is looking less attractive, obviously, at much higher US labour costs no, of course they’re not. They’re going to go the machine, mechanised route. Which of course means that there just aren’t going to be many jobs.

By the way, no, we can’t just say that US labour is more productive so this labour cost issue is less important. For the very reason US labour is more productive is because it uses more mechanisation.

There’s a joke about the factory of the future. It employs one man and one dog. The man is there to feed the dog and the dog is there to bite the man if he tries to touch any of the machines. While that’s extreme, it’s not that far off the mark. It’s exceedingly unlikely that any manufacturing that Apple does in the US will be done by human beings. There will be a few around to set up the machines but that’s about it. There just aren’t going to be many jobs from this.

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